Algorithmic Stablecoin
Algorithmic Stablecoin
A stablecoin whose value is maintained using smart contracts and algorithms, rather than direct collateral backing.
Relevance: Aims for price stability without reserves, but can be volatile and risky.
Asset-Backed Stablecoin
Asset-Backed Stablecoin
A stablecoin fully or partially backed by real-world assets like fiat, commodities, or crypto.
Relevance: Offers transparency and trust, popular for payments and remittances.
Blockchain
Blockchain
A decentralized ledger recording transactions across computers, ensuring data integrity and security.
Relevance: Foundation for digital assets, enabling transparency and trustless transactions.
Central Bank Digital Currency (CBDC)
Central Bank Digital Currency (CBDC)
A digital form of a country’s official currency, issued and regulated by its central bank.
Relevance: Government-backed digital money, could reshape monetary policy and banking.
Collateralization
Collateralization
Securing a digital asset or stablecoin by holding reserves to back its value.
Relevance: Key for maintaining trust and price stability in stablecoins.
Custody
Custody
Safekeeping of digital assets, often by specialized firms or platforms.
Relevance: Essential for institutional adoption and regulatory compliance.
Decentralized Finance (DeFi)
Decentralized Finance (DeFi)
A blockchain-based financial ecosystem enabling peer-to-peer services without intermediaries.
Relevance: Uses stablecoins and digital assets for lending, trading, and yield.
Fiat-Collateralized Stablecoin
Fiat-Collateralized Stablecoin
A stablecoin backed 1:1 by fiat reserves held in banks or custodians.
Relevance: Provides high price stability, used for trading and remittances.
Governance Token
Governance Token
A token granting holders voting rights over a blockchain protocol or DeFi project.
Relevance: Enables decentralized decision-making and protocol upgrades.
On-Chain / Off-Chain
On-Chain / Off-Chain
Whether a transaction occurs directly on the blockchain (on-chain) or outside it (off-chain).
Relevance: On-chain is transparent and immutable; off-chain is faster and private.
Overcollateralization
Overcollateralization
Locking more collateral than the value of the issued stablecoin or loan.
Relevance: Used in DeFi to protect against volatility and ensure solvency.
Peg
Peg
A mechanism by which a stablecoin maintains its value relative to a reference asset.
Relevance: Essential for stablecoins to function as reliable stores of value.
Proof of Reserves
Proof of Reserves
Verifying that a stablecoin issuer holds sufficient assets to back its tokens.
Relevance: Builds trust and transparency via audits or cryptographic proofs.
Programmable Money
Programmable Money
Digital assets that can be programmed with smart contracts for automated transactions.
Relevance: Enables innovation in payments, escrow, and financial services.
Redemption
Redemption
Exchanging stablecoins for their underlying collateral or fiat currency.
Relevance: Crucial for maintaining stablecoin price stability and user confidence.
Security Token
Security Token
A digital asset representing ownership of a real-world asset and subject to securities regulations.
Relevance: Enables fractional ownership and global trading of traditional assets.
Smart Contract
Smart Contract
Self-executing code on a blockchain that enforces the terms of an agreement.
Relevance: Powers DeFi, stablecoins, and digital asset applications.
Synthetic Asset
Synthetic Asset
A blockchain-based asset that mimics the value of another asset using smart contracts and collateral.
Relevance: Lets users gain exposure to traditional assets without direct ownership.
Tokenization
Tokenization
Converting rights to an asset into a digital token on a blockchain.
Relevance: Enables fractional ownership, liquidity, and easier transfer of assets.
Utility Token
Utility Token
A digital asset providing access to a product or service within a blockchain ecosystem.
Relevance: Used for payments, governance, or platform features.
Volatility
Volatility
The degree of variation in the price of a digital asset over time.
Relevance: Stablecoins minimize volatility, making them suitable for payments and savings.
Burn
Burn
Permanently removing tokens from circulation, often by sending to an irretrievable address.
Relevance: Used to decrease supply, maintain peg stability, or during redemption.
Commodity-Backed Stablecoin
Commodity-Backed Stablecoin
A stablecoin pegged to the value of a physical commodity, such as gold or silver.
Relevance: Enables exposure to commodities without direct ownership (e.g., PAX Gold).
Cross-Chain
Cross-Chain
Technology or protocols enabling digital assets to move or interact across different blockchains.
Relevance: Essential for interoperability between stablecoins and digital assets.
Decentralized Autonomous Organization (DAO)
Decentralized Autonomous Organization (DAO)
A blockchain-based organization governed by smart contracts and token holders, not centralized leadership.
Relevance: Used for decentralized governance (e.g., MakerDAO).
Demurrage
Demurrage
A fee or negative interest charged for holding a digital asset over time.
Relevance: Sometimes used in stablecoin designs to encourage spending.
Digital Asset
Digital Asset
Any asset that exists in digital form and is recorded on a blockchain, including cryptocurrencies, tokens, and NFTs.
Relevance: Stablecoins are a subset of digital assets.
Fiat On-Ramp/Off-Ramp
Fiat On-Ramp/Off-Ramp
Services or platforms allowing users to exchange fiat currency for digital assets (on-ramp) or vice versa (off-ramp).
Relevance: Critical for converting between stablecoins and traditional money.
Fungible Token
Fungible Token
A digital asset where each unit is interchangeable and identical in value.
Relevance: Most stablecoins are fungible, enabling seamless transactions.
Gas Fees
Gas Fees
Transaction fees paid to process and validate operations on a blockchain.
Relevance: Affect cost and speed of stablecoin transfers, especially on Ethereum.
Issuer
Issuer
The entity or protocol responsible for creating and managing a stablecoin.
Relevance: Centralized issuers or decentralized protocols play key roles in trust.
KYC (Know Your Customer)
KYC (Know Your Customer)
A regulatory process requiring users to verify their identity before accessing financial services.
Relevance: Required for compliance and anti-money laundering (AML).
Liquidity Pool
Liquidity Pool
A collection of digital assets locked in a smart contract to facilitate decentralized trading and lending.
Relevance: Stablecoins are used in pools to provide stability and reduce slippage.
Market Capitalization
Market Capitalization
The total value of a digital asset, calculated by multiplying its price by the circulating supply.
Relevance: Indicates the scale and adoption of a stablecoin or digital asset.
Minting
Minting
The creation of new tokens, typically governed by smart contracts or the issuer.
Relevance: Stablecoins are minted when users deposit collateral or fiat.
Tokenized Deposit
Tokenized Deposit
A bank-issued stablecoin representing a claim on actual deposits, recorded on a blockchain.
Relevance: Bridges banking and digital assets, offering instant settlement and programmability.